Share This:

A year ago I read Burton Malkiel’s seminal text on investing, A Random Walk Down Wall Street, and concluded that it made sense to invest in exchange-traded funds (ETFs). He imparted a challenging message: people are inherently poor stock pickers, but we can be better through diversification and buy-and-hold strategies. ETFs would be a quick, affordable, engaging way to diversify, too.

Despite the logic, my brain wouldn’t relent — I wanted to invest in an individual stock. Like a horse being kicked and yanked to the right but continuing left, I decided, against my better judgment, to place an investment in a risky, small cap stock. I’d been following it for quite some time, and made a small prior investment. I wanted to put more in, though.

Only two weeks after doing so, I lost $400. How could this happen? Why did I fall for this logical fallacy and bias? I was berating my brain for the errors. The company looked poised for a rapid expansion. I had drunk the Kool-Aid.

I knew better than to make this recent individual investment, and did it anyways. Humbled, I was the definition of many of the investing problems and fallacies individuals have a habit of engaging in.

Like my flawed investment, I realized much of my financial strategies had become stale. Having money to invest was a new feeling, and the do-it-yourself route wasn’t working. I needed to refresh my checking, savings, and investment streams. And I wanted to feel secure in my financial future. Here’s how I analyzed and reviewed it all.

1. Analyze current accounts

Almost all banking goes through Ally Bank. With 1% and 0.10% on savings and checking accounts, respectively, Ally is an industry leader. I’ve been with them for years, and appreciate the domestic ATM-fee reimbursements and free checks.

After paychecks are deposited into the account, about 40-50% of the money goes to regular, immediate bills. Then, another large portion gets spent on food and regular expenses throughout the month. This variable amount is something I continue to work on and struggle with. Reducing food budgets is something I’ve written about before, and will likely talk about again. It’s vital for a frugal life. But after all is said and done, there’s only about $300-400 in leftover funds.

Right now, I’ve been putting the surplus into a savings account. Additionally, I’ve been investing in individual stocks, but with mixed results. At this point, and with such little money at the end of every month, I need to be smart about what I do with any extra funds. These funds will be used to travel for job interviews, licensure, work clothes, moving expenses, and other emergencies. It’s important to have a fair amount on hand for all these moments.

After looking at the accounts, I can see that I have two piles: a checking and savings. There aren’t specific accounts for individual goals. Money is one big slush fund of fun.

Another major unaddressed part is regular investing. As mentioned it’s a weakness within my current financial management.

International travel has been also concern financially; not necessarily the cost, as I use bonus miles for most travel, but the currency exchanges. When I traveled to Colombia about a year ago, I needed local currency and had no method to get cash without fees. It cost me quite a bit to talk to a money exchange business and have them take my USD for Colombian Pesos.

2. Consider other accounts, options

Based on this analysis, I will stick with Ally Bank as my primary checking and savings method. Direct deposits will continue to flow to this checking account first. The goal will be to use this to manage all regular bills and upcoming expenses. Ally has really earned my respect over the years, and I’m happy to stay with them.

Staying with Ally doesn’t mean I’ll be staying with the same strategy, though. I’ll be opening up a new savings account and calling it, “Vocational Expenses.” This will be specific for interview, moving, and other work-related expenses incurred over the next three years. Now, how much should go in here and how fast? I will likely need $4000-5000 over the next few years, but this is a rough estimate. To meet this target, I’ll deposit $250 per month automatically out of every paycheck (Ally checking account) for the next 16 months on the first of the month.

International travel currency fees have been abysmal. To remedy this problem, I’ll be opening up a Charles Schwab Investor Checking account and solely using my Capital One Quicksilver credit card. The interest-earning checking account provides most of the features that an Ally Bank affords, but includes ATM-fee reimbursements for international ATMs and no foreign transaction fees for purchases out of country. The account is widely regarded as the best travel debit card in existence. And unlike Ally’s checking debit card, Schwab’s debit card has a chip and pin. In preparation for any travel, I will place a budgeted travel amount into the Investor Checking account, but leave it at low levels, as there’s no minimum balance necessary. Moreover, I’ll use the Capital One Visa for all international transactions, as it has no foreign transaction fees.

The last revised strategy will be a regular, monthly deposit into a taxable Wealthfront account of $100 on the first of the month. Wealthfront provides low-cost (and free for those under $15,000 invested) asset management, and automates the entire process. They choose real estate, emerging markets, and domestic stocks. They reinvest dividends and provide timely updates.

Now, I don’t need to worry about rebalancing my portfolio or looking for low-load or low-fee funds. I’m exceptionally happy with their service and professionalism. Because I might need the funds sooner than retirement, I’ll be placing them in a taxable, brokerage account for now. Eventually, when I have more cash flow and income, I will place more in my Roth IRA to invest without incurring additional taxes.

3. Review decisions and new strategy

With any financial management plan, there are going to be hiccups. When you make as little as me, automating savings and investing helps, but can also hinder my plans. Sometimes, I don’t have enough money one month and can’t make the savings necessary. At the same point, the plan motivates me to earn and save more. Maybe it’ll even encourage me to save on food!

As I analyzed and reviewed my current actions and future plans, I reflected on interest rates and banking business. Today, banks are not in the business of encouraging you to save. They nickel and dime customers — especially brick and mortar banks — for every little thing. Checks? That’ll cost you. Overdraft fees? You bet. Minimum balance not met? Say hello to my lil’ fee.

Banks earn more when you spend. They profit when you’re in peril; a tragic irony that places their interests (pun intended) above yours. From car loans to mortgages to credit debt, banks increase their margins by marketing these products to their customers.

To save requires great care, forethought, and hours of hard work. To spend takes the swipe of your card.

Reviewing and updating your financial plan is one of the most important actions you can do. If anything, it helps you understand your financial fitness and maximize interest earnings. And maybe still, it challenges you to look for new ways to save and scrimp.

Today, I want to talk about the reasons why I wrote this book, the process, and share some special bonuses.

About six months ago a well-respected writer and blogger took an hour of his time to talk with me. As we talked on the phone, I picked his brain about simple living and frugality. We saw eye to eye about the need for people to live minimally.

At the end of the talk he emphasized that I should write a book. Between flattery, confusion, ignorance, and gratitude, I hung up and froze in my chair. For years I had been writing, but doubted whether I was reaching anyone — whether my writing was any good. I had thought about writing a book, but inner insecurities prevailed and prevented me from writing one.

But here was someone I respected, and he was pushing me to publish. Something clicked. I realized that Frugaling was about more than personal finance, and I needed to compile that into a book.

When I started Frugaling, I knew about student loans and credit cards. I had lots of debt, and could share my desire to be done with it. In those early days, my articles felt like a reproduction of other personal finance gurus’ advice. The solutions were simplistic: create a budget, get a good credit card, and don’t eat out as much. They weren’t necessarily bad suggestions, but they seemed to miss perspective and depth.

Unfortunately, despite good intentions, many personal finance gurus were missing large populations in need of help. And I had simply joined the herd of regurgitators.

Then I had a comically simple epiphany: we are all individuals. One set of bullet points, “tips,” and “rules” won’t ever apply to everyone. And frankly, many financial gurus and “experts” are white and middle class or higher. Their experiences will likely differ significantly from various diverse groups and economic statuses. I wanted to reach a broader audience and speak to many pitfalls and problems that systematically prevent others from succeeding financially.

That revelation motivated different directions in my writing. Coupled with the inspiration from a respected author, I decided it was time to write and publish a book. Additionally, I wanted to make it affordable because ideas about personal finance, simple living, and minimalism should be accessible to all.

Using articles from Frugaling.org, new material, and a bold premise of reaching diverse audiences through personal finance, this first book will help readers build a foundation, philosophy, and resistance. Together, these sections aim to provide readers with a healthy dose of encouragement to live well on less. Let me explain what I mean.

Saving more, spending less, and preparing for the future are usually the first steps that people take to become more frugal. The foundation section provides an overview for why I decided to pursue frugality, new ways to pay off debt, and savings experiments that can be started today.

But saving money isn’t easy in a culture that idealizes consumption. Society tends to favor those with material wealth over inner health. As a consequence, frugality can be challenging and trying over longer periods. That’s why I added a section about the philosophy of frugality. If you’ve ever tried to save money, but wondered why you should, this part’s for you.

Armed with a strong foundation and philosophy for going frugal, the last section helps readers develop a resistance to advertising, marketing pressures, and the systemic problems that hold people back financially. I want readers to get upset with how we’re portrayed as mere consumers.

Here’s what people are saying about Frugaling:

“Sam provides a fresh perspective into the world of personal finance. In a world of copycat books almost entirely focused on earning more and spending less, Frugaling invites us to find freedom by thinking different about our finances, our lifestyles, and the world around us. It is a must-read.”

“I’ve been following Sam’s website Frugaling for six months now, and it’s clear that he is passionate about questioning consumerism. The methods in which he communicates his message are crystal clear, and I look forward to reading his posts each day.”

“Sam is candid in sharing his experience paying off student debt while pursuing an intentional lifestyle. He combines storytelling and his unique Frugaling philosophy with smart, practical advice for young adults looking to pursue the lives they want instead of being trapped by debt.”

“Sam writes with a genuine, thoughtful voice on topics of minimalism, frugality, and life improvement. He brings great insight to the issues he covers and challenges readers to question their own assumptions about our image-obsessed culture of endless consumption. A must-read for anyone grappling with the questions of what it means to chart a life that’s outside the ordinary and not focused on following the herd.”

I want to say thank you to all of these authors for their praise, encouragement, and help along the way. Please visit and check out their sites. They’re all fantastic writers and evangelists for saving more, spending less, and living well.

Lastly, I want to say thanks to you! I really appreciate your readership and hope you’ll support me on this first book. Be sure to share it spread the word on Twitter (#savelivegive) and Facebook. If you’re an Amazon Prime and/or Kindle Unlimited customer, the book will be free for the first 90 days. Otherwise, the book is $2.99.

Share This:

Every week I like to feature a few frugal articles that caught my eyes. Curl up in your favorite reading nook and enjoy. Hopefully these encourage you to live frugal lives!

Crank the heat of wear a sweater? by Brian MorelliOver the last two days, I experienced some nasty cold weather here in Iowa. The lows were scary. Considering wind chill, it was getting down to below 20/30 degrees! As winter drags on, it’s important to think about how you can save energy and reduce fossil fuel use. The simplest option is often best: put on extra layers.

The early retirement / financial freedom spreadsheet by J. Money
Are you looking to leave the rat race and retire early? You’re going to want to read J. Money’s guide first! Early retirees need to think about how much they’ll have over time, and what they’ll need to withdraw each year to sustain themselves. J introduces some important rules before you take the plunge! A must-read.

Hidden advantages of savings accounts by William Cowie
Ah, the trusty savings account! Pretty boring, right? In this low-interest time, savings accounts have gotten a bad rap. This article lays out some tried and true reasons why everyone should embrace the trusty savings account.

The Gender Gap in investing needs to go by Kate Dore
Last, but certainly not least, is an article from one of my favorite personal finance writers. In her latest post, she details the many reasons why the Gender Gap in investments is a serious problem for everyone. From stats about financial knowledge/literacy to information about how to change that, Kate is an awesome example!

Share This:

By Banksy

“We learn from history that we do not learn from history.”
— Georg Wilhelm Friedrich Hegel

Making and losing money during the Great Recession

In 2007-08, the stock market dove. We entered a massive “Great Recession.” I had a measly amount in an investment account and sold every stock. I couldn’t afford to lose any more. The panic was great and I followed it.

I held mostly cash, but bought a dangerous ETF that shorts stocks at 2X investment. For every dollar down in the market, I’d make two. Although, for every dollar up in the market, I’d lose two. By buying the ETF, my future would be tied to the demise of the global markets. It felt sick, but I was making money seemingly every day in the tough bear market. As others clambered to secure positions, I was profiting. The demise of other’s portfolios meant I was in the minority, making money.

At the time, I kept telling my mom to sell out of a large, inherited position in AIG. The major insurance company was spiraling out of control, and the public would soon realize how much debt the company hid. I wasn’t prescient, but dead set on her selling much of the position. The wealth was directly tied to the most risky industry.

Her financial advisor asked her to sit still. His sentiment was simple: don’t worry, don’t panic, and everything will be alright. I remember urging her over the phone, “Mom, you’ve got to sell at least a bit. The portfolio isn’t diversified and could be destroyed by this market.” She followed the trusted advisor’s approach and held on to the position. She stayed with the stock until it was a small fraction of the inheritance, and AIG was unrecognizable to its predecessor — what it used to be.

A reminder of the Great Depression

My grandparents had their own economic tumult: the Great Depression. They were a product of a time when food was scarce, fortunes changed, and many suffered. Both my grandmothers — at separate times — would talk about this time of disparity. They seemed weathered and changed by this period.

The Depression had a lasting impact. In their adult lives, they saved nearly everything, invested, and were constantly frugal. Eating out was a privilege — a true rarity even when they had wealth. They got creative with meals, celebrations, and travel. They learned to travel with and for less.

Not everyone suffered, though. A select few — the richest elite — continued to enjoy the spoils of wealth. Robber barons, corporate titans in the 30s and 40s, held disparate levels of wealth. They suffered, but not like most of society.

It wasn’t until President Roosevelt, his new deal, and World War II that the economic despair lifted. A vision for the future came into the picture. My grandparents served bravely, and were able to cultivate a middle class life afterwards. They were never “rich,” but always well. Their goals weren’t for mass consumption, but for peace and calm.

Lessons from a time of scarcity

Just like my grandparents before me, this generation’s financial calamity changed me. The Great Recession permanently shifted my life and that of my parents. The following are a few lessons learned along the way:

1. Who you know counts, but gratitude is greater

I left high school at the height of the Recession, and graduated college in 2011, as things began to look brighter. Still, I applied to countless jobs and found nothing. I submitted applications to Starbucks, Target, Wells Fargo, and a host of smaller companies. No one answered. The jobs were scarce, and money was tight. Everyone — including companies — became more conservative with their money.

A dean changed my life and gave me a chance. She gave me a paid opportunity to study and prep for graduate school in counseling psychology. I considered the offer, realized I had nowhere else to go, and embraced the opportunity. I’m forever indebted to her offer and help.

Without that helping hand, I’m not sure where I’d be, how much I’d be making, or if I would be the man I am today. An age-old lesson for business people is to network unmercilessly, but for me, I learned about gratitude. It’s vital that we remember who helped us succeed.

2. Modest living matters, skip the material mementos

I saw countless Americans lose everything material in the Great Recession. Crying families on TV and in documentaries exclaimed how they had lost everything. They were leaving houses — foreclosed on by banks that “afforded” them way more house than is necessary.

Those with modest means and mindsets braced through the economic tumult, but usually were able to maintain their lives. Those whose lifestyles were paycheck to paycheck or near their means suffered greatly.

Living through this time cemented a new ideal towards minimalism and reduction of material worth. Now when I travel, I try to avoid “collecting” and taking physical mementos. When I get something new (to me or the world), I research everything about it and try to buy based on value.

Last year I was interviewed by USAToday on the topic of buying homes. I might be a kook, but I don’t believe I want to buy a house unless I have all the cash necessary to do so. This Great Recession taught me to distrust debt and mortgages.

3. Save like it’s the last day on the job

In struggling to find work and seeing others do the same, I’m uncertain about my ability to hold one consistent job in life. Employers don’t necessarily have the incentive that they once had for employee sustainability. Everybody seems to be replaceable in this new, globalized economy.

While the unemployment rate has recovered from the depths of the Great Recession, salaries have stagnated or decreased. People are employed now, but they aren’t making what they once made.

Despite the economic uncertainty that will forever be a hallmark of my adolescence, I refuse to believe that we cannot continue to help each other. Whether that means serving and giving your time, or scrounging for a few dollars to give to charity, it’s still important to give selflessly.